News From the Oil Patch, Dec. 4

The Kansas Independent Oil and Gas Association has its Board Meeting and General Membership meeting December 6 from 2pm to 4pm at the Petroleum Club in Wichita. Call Kelly Rains of KIOGA, at 316-263-7297 or visit them online at www.kioga.org.

US oil production climbed by nearly 300,000 barrels a day in September to the highest level since April of last year. Texas production recovered from Hurricane Harvey, jumping to 3.57 million barrels per day in September, up from 2.38 million the month before. The government report, which tends to underrepresent the independent producers in Kansas, shows the Sunflower State produced about 95,700 barrels per day in September, down from 97 thousand barrels a day the month before.

OPEC and other large crude exporters agreed to extend oil output cuts until the end of 2018. They will reportedly review the deal at the next OPEC meeting in June. Nigeria and Libya, two OPEC members exempt from the deal, have agreed not to increase their output above 2017 levels.

Independent Oil and Gas Service reported 13 active drilling rigs in eastern Kansas last week, up three, and 22 west of Wichita, down two. Drilling is underway at sites in Barton and Russell counties, and they’re moving in completion tools at sites in Barton, Ellis, Russell, and Stafford counties. Baker Hughes reported 929 active rigs nationwide, an increase of two oil rigs and four gas rigs. Canada reported 222 active rigs, up seven for the week.

Kansas operators filed 33 permits for drilling at new locations last week, 19 east of Wichita and 14 in western Kansas, including one in Russell County. So far this year, operators have filed 1,324 drilling permits.

Independent Oil & Gas Service reported 14 new well completions over the last week, 1,210 so far this year, including five in eastern Kansas and 9 west of Wichita. Operators completed one well in Barton County and two in Ellis County.

A federal judge on Monday ordered Energy Transfer Partners to coordinate with native tribes to create an oil-spill response plan for the controversial Dakota Access Pipeline by April 1. The ruling from U.S. District Judge James Boasberg came nearly six months after he ruled that the Army Corps of Engineers’ review of the project was inadequate. The judge also asked ETP to get an independent auditor to review easement conditions and submit bi-monthly reports on safety conditions at the Lake Oahe pipeline crossing.

A Corrective Action Order issued by federal regulators to TransCanada this week says mechanical damage during original construction may have caused the recent Keystone Pipeline oil spill in South Dakota. The US Pipeline and Hazardous Materials Safety Administration said in the order that the affected segment of 30-inch pipe was removed for testing and replaced. TransCanada was ordered to restart the pipeline at a 20% pressure reduction and to conduct additional testing to identify and address threats to the integrity of the pipeline system. PHMSA says the investigation is ongoing. The pipeline leaked more than 210,000 gallons of oil Nov. 16, forcing a shutdown.

TransCanada is engaging with Nebraska landowners along the alternate route for the final leg of the Keystone project approved by regulators November 20. The company filed a procedural motion hoping to address some questions raised by the order, the last major regulatory hurdle for the controversial pipeline. The ruling shifts the pipeline further east, away from sensitive ecological areas, which requires new landowner agreements. The Canadian Press quotes a senior vice president saying TransCanada has begun contacting the new landowners and would “…strive to reach agreement on mutually beneficial terms.”

There’s more political trouble on the horizon for that huge proposed oil-by-rail port facility along the Columbia River. The incoming Port Commissioner in Vancouver has already promised to cancel the lease, and now a Washington state energy panel votes to recommend the governor reject the project. The panel will forward its recommendation to Democratic Gov. Jay Inslee by the end of the year, and he will then have 60 days to make a final decision.

Oklahoma City-based Continental Resources reports another huge international sale of North Dakota crude: 430,000 barrels for January delivery to unspecified international markets. The announcement follows one in October in which Continental will sell just over 1 million barrels of Bakken crude for export to China.

The State of Idaho is once again asking the federal government to take over regulation of saltwater disposal wells for the oil and gas industry. At least one oil company head tells the AP the lack of class-II injection well permits is a big hindrance to future development in Idaho. EPA said in a notice it will take public comments through Jan. 11 on the plan to transfer a portion of the state’s Underground Injection Control program.

US oil purchases by China increased more than 77 percent over a month earlier to 208,000 barrels per day. The US becomes China’s ninth largest crude oil supplier. A year ago the US had not exported crude oil to China.

The cousin of Venezuela’s former oil czar has been arrested, as a $1.6 billion money-laundering investigation continues into Venezuela’s state-run oil industry. The state prosecutor announced the arrest of Diego Salazar Friday on charges of money laundering and association to commit a crime. The former oil minister and ex-president of the state oil company were arrested Thursday after being removed from their posts earlier in the week. Both are accused of embezzling state funds, conspiracy and money laundering. Some analysts claim the probe is an attempt by President Nicolas Maduro to consolidate power within his socialist party ahead of next year’s presidential elections.

Venezuelan President Nicolas Maduro looked to the world of digital currency to circumvent U.S.-led financial sanctions, announcing on Sunday the launch of the “petro,” during a five-hour Christmas broadcast. Maduro said the crypto-coin would be backed by oil, gas, gold and diamond reserves.